Employee Recordkeeping Requirements

With so many disparate regulations governing employee recordkeeping requirements, it’s hard to keep track of exactly what you need to keep, and how long you need to keep it.

Nearly every federal employment law sets specific recordkeeping rules for employee data, depending on the data in question. In addition, most states, and some local municipalities, also have unique recordkeeping requirements that go beyond the federal mandates.

The Short Answer for Time & Attendance Record Retention

If you’re looking for the most straightforward solution for record retention and are not concerned about data storage and archiving costs, many experts will recommend keeping all employment data for the entire amount of time a person remains an active employee, plus 5 years. The only federal provisions that extend beyond a 5 year retention requirement are:

Records for pension and welfare benefit plans: 6 years retention following employment

Records for safety and toxic chemical exposure: 30 years retention following employment

The Long Answer for Time & Attendance Record Retention

The best record retention policies are probably the most inclusive policies. Keeping as much information for as long as possible is a best practice for protection against labor-related litigation.

But in addition to ensuring compliance and protecting against litigation, a good record retention policy helps apply time and attendance rules evenly across all employees. This can be especially helpful to dismiss claims of different treatment based on discrimination.

When creating your record retention policy, it is useful to categorize documentation and data retention requirements by employee status:

Pre-employment: Retain Records for Non-Hires for 2 Years Plus

During Employment: Retain All Employee Records

Post-employment: Retain Records for 4 Years Plus

Employee Benefit Record Retention

Employee time off, such as vacation time and sick time, must be carefully tracked – ideally with automated time and attendance systems to protect against claims of discrimination. Since some states require unused accrued vacation time to be paid-out upon termination, accurate and complete documentation helps dispel any compensation claims from former employees.

As stated above, pension and retirement-related records must be retained for 6 years following employee separation according to the Employee Retirement Income Security Act (ERISA).

Family and Medical Leave Act-related leave records and workers’ compensation-related records are recommended to be kept indefinitely to protect against future litigation.

Family & Medical Leave Act (FMLA)

Application

Applies to employers with 50+ employees as defined by the FMLA.

Retention Requirements

Retain for 3 Years: Detailed payroll and employee data, records of FLMA leave, copies of all employee notices and documents describing FMLA policies, records of premium payments made by employees on FMLA leave, copies of requests for leave and notices to employees responding to requests for leaves and designating leaves as FMLA leaves, records of any dispute regarding the designation of a leave as FMLA-related. Any medical records must be kept in a separate, secure location.

Internal Revenue Service (IRS) Regulations

Application

All employees

Retention Requirements

Retain for 4 years after payment, deduction of taxes, or due dates of returns: Basic employee data (name, address, Social Security number, and birth date), pay records (daily and weekly hours, overtime, tips, deductions from pay, taxes withheld, fringe benefit payments, and the amounts and dates of wage payments), copies of employee withholding forms (W-4 or W4-E), annual records of total wages and taxable pay, documentation describing why any taxable pay did not equal the total pay for an employee, the amount paid into the state unemployment fund (including employee pay deductions), and experience rating data.

Note: Retention can be extended by the IRS as long as records are pertinent to a tax filing in question. For this reason, many experts recommend keeping IRS-related records indefinitely.

Additional Regulations & Recordkeeping Requirements

Additional regulations and recordkeeping requirements may apply to your business and employees. For a more in-depth look into these more obscure recordkeeping requirements, Acumen recommends reading this third-party whitepaper.

Please contact us to learn more about our employee time and attendance systems or request a quote today.